What is Donor Retention and How do I Maintain it Year After Year?
What is “donor retention”?
Donor retention is the measurement of donors who continue to donate after their initial donation.
Nonprofits with a high donor retention rate have long-term supporters, who come back year after year. Nonprofits with a low donor retention rate need to continually acquire new donors or larger gifts.
Donor retention is a fundraising method that seeks gifts from existing donors. Regular, monthly, and annual donors are all defined as different types of retained donors because of their continual gift giving participation over an extended period of time.
The goal is to get donors to give year after year. Proper retention of these donors will allow your nonprofit organization to devise a reasonable fundraising budget for its campaign and mission success. This allows nonprofits to have a reliable revenue for years to come.
High donor retention rate yields recurring gifts with low acquisition cost.
Low donor retention rate yields one-time gifts with high acquisition costs.
Why is donor retention important?
Good donor retention gives your organization a general outline of what is working. This allows your organization to determine which campaign techniques are most effective.
Donor retention builds strong relationships with donors who care about your mission.
It properly promotes your cause.
It has direct congruency to generating larger donations.
The overall effects of proper donor retention will save time and cut unnecessary costs.
The Rate of Donor Retention:
Based on a survey conducted from 2014 to 2015, from the AFP (Association of Fundraising Professionals) 2016 Fundraising Effectiveness Survey Report, the results determined the average donor retention rate is around 46% with an attrition rate of 54%. This percentage reflects a total amount of $8.6 billion in gifts from 8.27 million donors with average gross revenue of $869,000 from the 9,922 participating organizations.
Overall Retention Rate - The number of donors who gave last year and gave again this year, divided by the total number of donors last year.
New Donor Retention Rate - The number of new donors last year who gave again this year, divided by all new donors last year.
According to the FEP Donor retention report 2014-2015, ‘New’ donor retention rates have been steadily decreasing since 2008, averaging in a reduction of -3.4% each year.
Repeat Donor Retention Rate - The number of donors last year who gave again this year (excluding new donors last year), divided by all donors who gave last year (excluding new donors last year).
In addition, the FEP Donor Retention Report, Repeat donor retention rates have been steadily declining over the last six years averaging -1.68% per year.
<Check out AFP 2016 Donor Retention Report: http://afpfep.org/reports/ for more information>
Improving your fundraising techniques will not only reduce costs but will strengthen time management. Determining what specific marketing techniques work can help your organization to continually acquire new donors, as well as retain donors each year. As an organization, you should be trying to understand the reasons why a donor will continue to give to your campaign. When donors give and keep on giving to your organization, this usually indicates a sign of trust that their money is being well handled and appropriately designated. Those who become annual donors have a higher probability of spreading awareness for your organization. “Word of mouth” is the only free form of marketing that requires no effort from your organization. Those that have donated to your nonprofit for a long period of time will be the ones that care enough to spread the positive word about your organization.
Positive Donor Communication:
As a fundraiser, your goal is to have donors feel inspired about donating to your cause/mission. Developing a positive marketing presence will allow the donor to see a progressive incline in your attempts to better your specific cause. Your organization should express change and should demonstrate your efforts to make a positive impact in the world. Therefore, allowing your donors to feel that they are a part of that change.
Each development piece should evoke some emotion. Express to the public through stories and experiences involving the problems your organization is working to help solve. Give them a reason to believe in your mission. Open their eyes to the true problems that do exist and to those individuals that are afflicted by the problem. Allow them to make changes on their own, with only slight insight. Provide them with the information necessary to believe that their contribution is making a difference. Continue to inspire and enlighten these donors year after year.
Successful nonprofits usually focus their fundraising power on obtaining lifetime donors through maintaining and building their relationships with them. As your relationships continue to grow, these lifetime donors are more likely to contribute to the overall success of your nonprofit organization. A key to successful donor retention is to immediately try to build your relationship with a new donor.
As a fundraiser, your target is to build your relationship with each donor individually. Remember, donors choose to invest in your cause, and even though their investment comes in monetary form, they can and will serve a greater purpose than just a single donation. When a donor feels they’re a part of something greater than themselves, this increases the likeliness the donor will volunteer, refer others and even donate again.
Ways Your Organization can Increase Donor Retention
Upon receiving a new donor or donation, immediately show appreciation for their contribution. Direct recognition can influence your overall impact on the relationship your donors have with your organization. Let’s be honest, we are all human, and we all yearn for affection and recognition for the things we have done. Responsive and thoughtful “Thank You” letters will have an immediate psychological affect on a donor. It’s that simple. Be prepared for a donation, create a variety of acknowledgment letters, send out a thoughtful email, or just pick up the phone and call. Constantly remind your donors about the importance of their contribution and give them updates on upcoming events that they should be a part of. Continuous acknowledgment will further build your relationship with each donor.
Showing appreciation for a donation can have a major impact on new donors as well as recurring donors. Give them praise for their contribution.
Ways to show appreciation:
Feature new donors in upcoming newsletters.
Create a donor appreciation page on your website.
Post pictures of recent events or volunteer programs.
Send out simple acknowledgment letters and emails.
Give a direct phone call (always has a major impact)!
Create a levels program to encourage continuous donor growth.
The possibilities are endless. People always want to be a part of the bigger picture, allow them to be the difference.
Express your organization's mission wherever, whenever, and however you can. Constantly remind the public of the problem and how you’re working to help solve it. Share each experience through powerful stories; create a direct correlation to the problems. Great content has always been a key in delivering awareness. It helps build a connection to the problem and tends to provoke emotions which can help boost awareness.
Give your audience a voice. Allow your donors to be the storytellers, give them the power to express their personal experience with the problem and what they are doing to influence change. These heart-stirring stories will not only attract or influence new donors, but will also remind your current donors why they continue to support your organization.
Formulate a plan:
Donor retention starts with understanding your organization’s communication and outreach. Gather information from each piece of marketing you send/receive.
What happens when someone donates?
What material are you sending to your donors?
What exactly are you trying to learn from each piece of marketing?
Determining what works and what doesn’t work allows your organization to assimilate the overall success of each marketing piece. Creating a detailed plan keeps each person within the organization on the same wavelength and will streamline the retention process.
Prepare yourself for each campaign. Create templates that can be used to easily respond to a donation. Construct efficiency within your day-to-day job and save your organization valuable time by evaluating the importance of your efforts.
Retaining donors results from gaining donations from the two major parties; new donors and existing donors. Even though your acquisition of new donors is a more costly method, you can never count them out of the situation. The acquisition of new donors could potentially lead to recurring donors over time. These long-term donors will play a valuable role in the overall success of your nonprofit organization.
As you grow as an organization, continue to discover new ways to become better fundraisers, create stronger relationships and find lifetime donors. These friendships will be the pillars on which your organization will stand upon.